AEMC takes bite out of NEM congestion with draft transmission access reform


An Australian Energy Market Commission (AEMC) consultation paper warns that without changes to the transmission access process solar and wind investments will face increased congestion and the use case for energy storage technologies, including big batteries, will be diminished.

AEMC Chair Anna Collyer said the Australian Energy Market Operator (AEMO) has forecast a seven-fold increase in grid-scale wind and solar capacity and a 19-fold increase in storage capacity across the National Electricity Market (NEM) by 2050.

“As we transition towards a weather-dependent energy system and implement initiatives such as renewable energy zones, the Capacity Investment Scheme and Rewiring the Nation, it is crucial to carefully manage congestion to minimise the costs of the transition,” Collyer said.

A hybrid model approach to transmission access reform, initially proposed by stakeholders and outlined in the consultation paper is designed to address the challenges posed by the rapid growth of renewable energy and storage projects.

‘’Currently, access arrangements in the NEM are not well suited to a future grid dominated by variable renewables and storage,” Collyer said.

”Without reforms to transmission access, these risks and inefficiencies will increase as the transition to net zero progresses.”

AEMC Transmission access reform objectives.

Image: AEMC

AEMO’s transmission access reform aims to protect generators from being “cannibalised” by providing priority access in investment timeframes, offering greater certainty on dispatch outcomes over the life of the asset.

It also aims to create incentives for demand side and two-way technologies to locate where they are needed most and operate in ways that benefit the broader system.

The AEMC said that without reforms solar and wind investments will face increased congestion and not be effectively utilised and renewable energy zones (REZs) may be undermined by generators located outside the zone “free riding” on investments intended for REZ participants

The commission also warned that energy storage technologies and flexible demand like green hydrogen will not be rewarded for congestion-alleviating behaviour and their use case will be diminished.

Transmission access reforms will protect investments.

Image: AEMC

“Our proposed reforms aim to ensure that the right projects are built in the right locations, generating at the right times, benefiting both industry and household consumers,” Collyer said.

The AEMC’s hybrid model builds on reform work carried out by the former Energy Security Board (ESB) in consultation with investors, renewable developers, consumer groups, and other stakeholders.

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